Good morning, and welcome to Genie Energy’s Third Quarter 2022 Earnings Call. All participants’ will be in listen-only mode. [Operator Instructions] After today's presentation by Genie Energy's management, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

Thank you. With me today are Michael Stein, Genie Energy’s CEO; and Avi Goldin, Genie Energy’s CFO, who will discuss operational and financial results for the three months period ended September 30th, 2022. Any forward-looking statements made during this conference call, wheter general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that we filed periodically with the SEC. Genie assumes no obligation to either update any forward-looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. During their remarks, management may make reference to adjusted EBITDA, a non-GAAP measure. Management believes that its measure of adjusted EBITDA provides useful information to both management and investors that supplement our core operating results. Our earnings release which is posted on our IR page includes a reconciliation of consolidated adjusted EBITDA to its nearest comparable GAAP measures, consolidated net income and income from operations for all periods presented. In addition, adjusted EBITDA for applicable segments are reconciled in the earnings release to their respective segment’s income from operations for all periods presented. Finally, please note that Genie Retail Energy International's results were accounted for under discontinued operations during the third quarter and our historical results reported today and discussed on this call reflect this move. I will now turn the conference over to Michael Stein, Genie Energy’s Chief Executive Officer.

Thank you, Brian. Welcome to Genie Energy's third quarter 2022 earnings call. We achieved record third quarter margins and profits this quarter as energy prices remain high with increased volatility. We were well positioned from a risk management perspective and in combination with our reduced customer acquisition efforts at GRE, we were able to generate significant year-over-year increases in gross profit, adjusted EBITDA, net income and cash flow from operations. Looking at our segments, Genie Retail Energy or GRE generated a record Q3 gross profit of $43 million and adjusted EBITDA of nearly $28 million. Over the course of the third quarter, we executed our plan to spend operations and are no longer servicing customers in the Scandinavian market. As a result, GREI's results are now reflected in discontinued operations in our financial statements. Genie Renewables or GREW as we have taken to calling it had an exciting quarter. First, we signed several new contracts to build solar arrays for commercial customers, which significantly grew our backlog of existing business. Separately, we also made significant progress in our vertically integrated strategy where we will build or acquire solar farms ourselves or through sunlight energy investments. In the third quarter GREW secured the site rights on which to potentially build 64 megawatts of solar generation in New York and Pennsylvania. We expect the first project to receive full approvals necessary for construction in the fourth quarter. Once construction begins, we expect the solar field to be generating power as soon as the second quarter of 2023. This project, the community solar farm, which will be wholly-owned and operated by GREW will leverage our vertically integrated business model and strong balance sheet. We will keep you apprised of our progress on this project, as well as significant milestones achieved with our other…

Thank you, Michael, and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for three months ended September 30th, 2022. Throughout my remarks, I will compare the third quarter of 2022 to the third quarter of 2021. Focusing on the year-over-year rather than sequential comparisons, removes seasonal factors, characteristic of our retail energy business. The third quarter is typically characterized by the highest levels of per meter electricity consumption associated with the peak cooling season and the lowest levels of per meter gas consumption, which is highly dependent on heating usage. Our financial results this quarter reflect the exit from our Scandinavian REP businesses during the quarter. Results for these businesses are reported as discontinued operations for this in all prior periods. This continued results for the year ago quarter also include results from our operations in the U.K., which were discontinued in the third quarter of 2021. Genie posted an exceptionally strong third quarter, building on the positive momentum from the first half of the year. Our results continue to be positively impacted by our decision in late 2021 to optimize the value of our forward hedge book by reducing customer load and responsive volatility in wholesale electricity prices in the United States. As a result, our consolidated results include record levels of third quarter gross profit, adjusted EBITDA and net income. As Michael noted, we also continued to return capital to our shareholders through dividends and redemptions of our preferred stock. Turning now to our third quarter P&L. Consolidated revenue decreased 7.3% to $81.3 million. At GRE sales fell 7.4% to $79.9 million, primarily reflecting reduction in electricity sales from our lowered electric meter count, substantially offset by a combination of higher electricity rates and increased gas sales. As…

We will now begin the question-and-answer session. [Operator Instructions] Your first question for today is from Aaron Shafter at Great Mountain Cap. Aaron, your line is live.

Hi, thanks, operator. Guys, congratulations on another very solid quarter, really like the improvement and the timeline and what you're doing on gross margins. So you noted in both the release and today that you've bought back a lot of preferred shares. You've basically -- recently have the amount of preferred shares and your plan is I guess to redeem -- correct me if I'm wrong another $1 million each quarter, if you do that within less than two years, you'll have no preferred shares left. So am I correct that, that's the projected game plan?

Hi, Aaron. Thanks for the warm wishes. Yes, as of now, the Board has only authorized an ongoing $1 million a quarter that obviously is subject to change at any time, but that is the current plan. And yes, if that were to be done, then, you know, would be the preferred to be done in two years.

Okay. And I see you didn't -- I didn't notice any buybacks of any of the common shares. If you take this latest quarter when you put it together, your trailing PE is really, really low and the shares look to be a bargain, I'm looking if -- and because the amounts -- despite the buybacks and the preferred, you've really increased your cash on hand. I'm wondering, if we can expect to see any common share buybacks. You can share anything on that?

Again, it's something that we always look at. We do have authority up to a decent amount from the Board to do so. And as we've always said, we try to be pretty opportunistic with our buybacks, you know, buy as low as possible. So sometimes, you know, maybe we miss some windows here and there. But that's pretty much what I can say about that.

Okay. And the solar field that you've talked about that you're about to start building on that. I'm curious, one, how that will be financed? If you have any projected costs and when you see it eventually adding to the bottom line?

Yes. So most likely it'll be financed with a combination of equity -- our equity and debt. The debt would only have recourse to the project just wouldn't be parent level debt. They wouldn't encumber any of our other profitability, it would purely be on the project itself. In terms of when it could start throwing off profitability? I think we're going to get the approvals this quarter and if we get approvals this quarter, it could potentially be fully built, call it, first or second quarter, and that's when it starts generating revenues as soon as it gets turned on. So that's the general timeline. In terms of the size of the project, I think we'll probably share that at a later date.

Okay. And you mentioned that you've totally exited the Scandinavian market, I guess, before -- up until this point, it had just been Finland, because you had gotten out of Sweden. And what were your thoughts on deciding to exit that market?

Really, we received the two as one operation. Remember, we were operating both entities out of one headquarters. We shout like where we are today on what's needed to wind down the businesses, it made sense to consider a discontinued operation, that doesn't mean that in six months or nine months, if there's an opportunity for us to start marketing again that we wouldn't. But since we don't have that in the immediate short-term plans, it was the accountants and our auditors position that we should consider it discontinued.

Okay. And finally, getting back to your cash on hand, any chance of seeing a dividend increase?

Again, those are topics of conversation along with buybacks on that and on the comment and the preferred that we had periodically. At the last Board meeting, we did not increase the dividend. I can't say for sure what's going to happen in future quarters.

Okay. All right. Thanks very much. And congratulations again on another strong quarter.

Thank you.

Your next question for today is coming from Brett Rush at Centennial Management.

Hey, guys. Quick question on the solar business. Are you guys able to say, kind of, what you expect in terms of profit margins? And then just, kind of, targeted stabilized cash on cash returns for these solar projects?

Yes. I mean, each solar project is different and has a different return profile, different margin, so I think it's going to be hard to say. And also, to the extent that we use debt to help finance these projects, what the interest rates will be at the time when we're ready to actually take out that loan, it's going to be very relevant to determining the exact financials. But typically, when we do these calculations, and we look at projects that are interesting to us, we try to target projects that have IRRs in the high teens or low-20s. So we'll see if that comes to fruition and each project is a little bit different, but that's what we're targeting.

Got you. And so the IRRs that -- when you're targeting these high teens IRRs, is the majority of that IRR coming from current cash or is there some sort of terminal value that's driving a high percentage of that IRR?

Avi, do you want to take that one?

Yes, sure. So it's a little bit of a mix part of the reason that these projects are so exciting and can really yield those, kinds of, returns to the equity is because there's a lot of upfront value that comes in through the monetization of the tax incentives and various other programs, depending on the location, which you are that come in the form of actual not -- some are tax and some are just through cash back through other programs. So it's the ability to find the right capital stack to minimize the amount of equities that's required, get that cash back on the front-end to refinance and then there's some form of a tail in all the projects as well. So I know I'm talking a little bit abstract, but that's the way we're aggressively approaching it and why we're able to target those attractive returns.

Got it. Okay. Thanks guys.

Sure.

[Operator Instructions] This concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.